Specialist insurer and reinsurer Beazley has reported a combined ratio of 100% for the first-half of 2019, as a significant jump in investment income helped to offset higher claims, lower reserve releases and a loss in its reinsurance segment.
Beazley has announced profit before tax of $166.4 million for the first-half of 2019, compared with $57.5 million a year earlier.
The firm’s combined ratio weakened year-on-year from 95% to 100%, which was helped by recorded net investment income of $170.3 million, compared with just $8 million a year earlier.
Discussing the firm’s performance in the opening six months of the year, including Beazley’s strong premium growth, Chief Executive Officer (CEO), Andrew Horton, said: “Beazley achieved strong premium growth of 12% in the first half of the year. Claims concentrated largely in our marine and reinsurance divisions drove our combined ratio to 100%, but premium rates have adjusted accordingly and margins in many lines of business now look healthier than they have in some years.
“We expect to achieve double digit growth over the full year, while continuing to reserve prudently.
“Our investment return was 3.3% for the first half of 2019, with nearly all asset classes performing strongly. Investment returns are expected to be lower in the second half of the year.”
As a result of higher claims, the re/insurer’s reserve releases fell in the first-half of the year to $3.4 million from $48.1 million a year earlier, so a fairly significant dip.
The firm notes that higher losses, including creep from Typhoon Jebi in Japan, impacted its amount of reserve releases and also its reinsurance division in the period. Within its reinsurance unit, Beazley’s net insurance claims increased from $17.7 million in 2018 to $55 million in 2019.
The reinsurance combined ratio weakened significantly in the period, from 68% to 140% in the first-half of 2019, as the unit fell to a loss of $11.3 million, compared with a gain of $19.8 million a year earlier.
Reinsurance was the only segment to fall to a loss in the period for Beazley, but it’s clear that without the significant jump in investment income, the firm’s first-half 2019 result would not have been too positive.
